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Canadian Private Market Recap: Feb 12

The North American equity markets continued their decline, particularly in Canada. The West Texas Intermediate benchmark remains below US$30, despite OPEC’s announcement last week of plans to curtail production. Uncertainty regarding the Federal Reserve’s plan to raise interest rates continues to add volatility to the equity markets. Despite this equity market volatility, credit markets remain robust.

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Capital Markets

This Week

Last Week

Year Ago

Last Week

Year Ago

Equity Markets

S&P 500 Composite

1,865

1,880

2,088

-0.8%

-10.7%

TEV/Forward EBITDA

9.6x

9.6x

10.5x

-0.0x

-0.9x

TSX Composite

12,381

12,764

15,229

-3.0%

-18.7%

TEV/Forward EBITDA

9.6x

9.8x

10.1x

-0.2x

-0.5x

Russell 2000 Index

972

986

1,216

-1.4%

-20.1%

TEV/Forward EBITDA

9.3x

9.4x

10.4x

-0.1x

-1.2x

CBOE VIX ("Fear Index")

25.4

23.4

15.3

+8.6%

+65.6%

USD/CAD

0.722

0.721

0.801

+0.001

-0.079

Debt Markets

U.S. 10-Year Treasury Yield

1.8%

1.9%

2.0%

-0.1%

-0.2%

U.S. Middle Market Loans

New Issue Clearing Yield ≤ $50 million

6.4%

6.4%

6.6%

0.0%

-0.3%

Spread to Treasury

460 bps

449 bps

465 bps

+11 bps

-5 bps

Total Debt/EBITDA

5.6x

5.6x

4.8x

0.0x

+0.8x

North American M&A Dollar Volume Reaches All-Time High in 2015

Despite the recent turbulence in the equity markets, M&A conditions remain robust.From a historical perspective, North American M&A dollar volume reached an all-time high in 2015.

While the M&A market conditions were excellent for blockbuster deals, the more relevant measure of the health of the M&A mid-market is the number of transactions.On this measure, North American activity has been very strong, eclipsing 2014 and only 1.6 percent behind the all-time high activity seen in 2012.

Weekly Canadian Private Market M&A Report

Announced Deals

Sinoenergy Investment to acquire Long Run Exploration

Novacap to sell Enviro-Viridis to PE-backed GFL Environmental

Nasdaq to buy OMERS-backed news distributor Marketwired

Closed Deals

Wellington Financial leads funding of TUC’s merger with CareWorx

Tricor Pacific Founders Capital acquires Totally Chocolate

PE-backed VersaCold acquires assets of Gary Heer Transport

Maibec buys New Brunswick shingle manufacturer

Insight Equity-backed Material Sciences acquires Metal Koting

Bedford Capital sells L.B. Maple Treat to Champlain Financial

PSP-owned H2O Power buys Pennsylvania hydroelectric facilities

PE-backed Mister Car Wash buys Florida car wash locations

Announced Deals

Sinoenergy Investment to acquire Long Run Exploration

Long Run Exploration Ltd. (TSX: LRE), a Canadian intermediate oil and natural gas company, backed by Canadian private equity firm Sprott Resource Corp., has identified the Chinese buyer in its previously announced acquisition deal as Sinoenergy Investment Corp.. The deal is valued at $770 million.After reviewing the company’s options to improve its capital structure, Long Run’s Board of Directors and management believe that pursuing the Arrangement is in the best interest of Long Run and its stakeholders.

Nasdaq to buy OMERS-backed news distributor Marketwired

Nasdaq Inc. announced it would acquire the Toronto-based newswire operator and press release distributor Marketwired LP for an undisclosed sum, adding to the exchange operator’s corporate services offerings. The deal, which is subject to regulatory approval, would be funded through a mix of debt and cash and is expected to close in the first quarter of 2016. Nasdaq’s corporate services clients would benefit from access to Marketwired’s social media targeting tools and analytics. “This is a major opportunity for our Corporate Solutions business to enhance its end-to-end portfolio of services for communication” said Stacie Swanstrom, head of corporate solutions at Nasdaq.

Novacap to sell Enviro-Viridis to PE-backed GFL Environmental

Canadian private equity firm Novacap and Development EDB Inc. have agreed to sell Enviro-Viridis Inc., a Laval, Québec-based waste management specialist that offers vertically integrated services, to GFL Environmental Inc., a Vaughan, Ontario-based environmental services company. No financial terms were disclosed for the deal. GFL, backed by Highbridge Principal Strategies and other investors, said the new deal will diversify its Québec service offerings and facilitate further growth. According to the President of Enviro-Viridis, Richard Lafrenière, Enviro-Viridis will “benefit from GFL’s expertise, national network and financial support to continue our growth and consolidate our leadership position in a highly competitive market”.

Closed Deals

Wellington Financial leads funding of TUC’s merger with CareWorx

TUC Managed IT Solutions, a managed information technology and cloud services provider, has merged its operations with CareWorx Inc., a provider of technology solutions to senior care facilities. No financial terms were released. Mark Scott, CEO of TUC and the newly-merged company, commented on the merger, “TUC and CareWorx have been working very closely since November 2014 – strategically, taking our partnership to the next level just made sense. Together we saw new opportunities emerging in this market set to explode over the next decade.”

Tricor Pacific Founders Capital acquires Totally Chocolate

Tricor Pacific Founders Capital has acquired Totally Chocolate LLC, a North American manufacturer of precision-engraved chocolate for corporate and special event uses. No financial terms were disclosed. Derek Senft of Tricor Founders said about the transaction, “The investment is consistent with our strategy of making control investments in food and other consumer packaged goods businesses, with EBITDA of $2 to $8 million, across the Mid-West and Western USA and Canada. We find a lot to like in the candy and chocolate industry and expect to make further acquisitions in the industry, whether to hold and manage separately, or to be integrated with Totally Chocolate.”

PE-backed VersaCold acquires assets of Gary Heer Transport

VersaCold Logistic Services has bought the assets of Gary Heer Transport Ltd., a refrigerated provider of truckload cross-border transportation services between Western Canada and the United States. No financial terms were released. The asset acquisition marks VersaCold’s entrance into the cross-border transportation market segment and will establish the company’s newest subsidiary. Douglas Harrison, President & CEO of VersaCold said, “This acquisition marks an exciting time of growth and service expansion at our company. By offering cross-border transportation services through VNATS, we continue to live our vision of being our customer’s most trusted and reliable long-term partner by providing new and innovative solutions and services that enable them to achieve great business success.”

Maibec buys New Brunswick shingle manufacturer

Maibec Inc. has acquired Cedar Balmoral Ltd., a manufacturer of Eastern white cedar shingles located in Balmoral, New Brunswick. No financial terms were disclosed. François Tardif, President of Maibec said, “A growing number of homeowners and builders, particularly those in the U.S., are turning to Maibec Eastern white cedar shingles. This acquisition will allow us to keep pace with this increased demand and to develop new markets.”

Insight Equity-backed Material Sciences acquires Metal Koting

Material Sciences Corp., a portfolio company of Insight Equity, has acquired Continuous Colour Coat Ltd. (Metal Koting), a business that provides galvanized, painted, and printed steel and aluminum coils to a variety of companies in the construction, automotive, leisure product, and packaging industries. Pat Murley, CEO of Material Sciences, commented, “We are excited to bring Metal Koting onto the Material Sciences team. Metal Koting complements the capabilities we have at our other four operating locations in Ohio, Indiana, and Illinois and broadens our geographic reach.”

Bedford Capital sells L.B. Maple Treat to Champlain Financial

Champlain Financial Corp., a mid-market private equity firm based in Montréal, has bought L.B. Maple Treat Corp (LBMT) from Bedford Capital, a Toronto-based mid-market private equity firm. LBMT is one of the largest bottlers of branded and private label maple syrup in the world. The deal’s financial terms were not disclosed.

PSP-owned H2O Power buys Pennsylvania hydroelectric facilities

H2O Power LP, a North American hydro platform, has bought two run-of-river hydroelectric facilities based in Pennsylvania. No financial terms were released. The purchase represents Oshawa-based H2O’s first foray into the U.S. market. Jim Gartshore, President of H2O said, “We are delighted with this acquisition, which represents H2O’s first foray into the U.S. market. The Allegheny 8 & 9 facilities are an excellent fit within H2O’s existing portfolio of hydroelectric generating assets. We look forward to leveraging our 24/7 control center and expertise in managing run-of-river hydroelectric facilities to optimize power generation.”

Penfund-backed Mister Car Wash buys Florida car wash locations

Mister Car Wash, backed by Penfund, has bought four Bill’s Car Washes in the Florida communities of Casselberry, East Orlando, Sanford and Chickasaw. The deal’s financial terms were not released. As a result, Mister Car Wash now operates 164 car wash locations in 19 states and has expanded its Florida footprint to Casselberry, East Orlando, Sanford and Chickasaw. Casey Lindsay, Director of Acquisitions for Mister Car Wash, commented, “Since opening Bill’s Car Wash in 1992, Bill Walker has built a great platform, well known for delivering a quality car wash with a friendly customer experience. Working with the team at Bill’s has been great and we’re thrilled to welcome such a strong employee base to our growing team.”